David Lecoque The Business and Financial Models Workshop was held in Cambridge in January 2016. The workshop invited participants from business, academia and NGOs to address the following questions: o It is generally considered that private enterprises and independent power producers have a key role to play in bringing sustainable energy-enabled businesses to un-served rural communities. o What are the main opportunities and challenges in establishing viable business and financial models for these organisations, and what innovative approaches are emerging to meet these challenges? o What support can governments and development agencies usefully provide? More info: http://e4sv.org/events/smart-villages-in-developing-countries-business-and-financial-models-workshop/

1. Smart Villages Workshop
Trinity College, Cambridge, 5 Jan 2016
Source:FRES
David Lecoque, ARE Policy and Business Development Officer
Business models in practice:
off-grid RE success stories in
developing countries

2. Structure
1. Introduction to the Alliance for Rural Electrification
2. Off-grid RE success stories
3. Lessons learnt and Messages

3. Introduction to ARE

4. 1. Introduction to ARE
Click image to download publication
• International business association representing the decentralised energy
sector working towards the integration of renewables into rural
electrification markets in developing and emerging countries
• Created in 2006 by companies and pioneers with decades-long experience,
ARE enables improved energy access through business development support
for more than 90 members along the whole value chain for off-grid
technologies by targeted advocacy and facilitating access to international
and regional funding
• Global platform for sharing knowledge and best practices to
provide for rapid implementation of available and advanced
RE technologies and services
• Working on a wide variety of topics including early finance
access, business models and effective project implementation

5. Members from industry, academia and public sector

6. We partner with international and national organisations, projects and
initiatives, the media and other industry platforms.
Strong partners
Selected international organisations with which we have formalised cooperations
6

7. Off-grid RE success stories

8. 2.1. Access Energie
Hybrid System of Solar and Diesel for Rural electrification in Bancoumana (Mali)
The company:
• ACCESS is a Malian solar and hybrid energy systems company with 10 years of
experience in urban and rural electrification sectors
The challenge:
• 20.000 inhabitants at Bancoumana, no modern energy services available.
• Monthly avg expenditure for kerosene, candles and batteries was around 25,50 EUR
The Renewable Energy Solution:
• Mali solar irradiation - 5-6kWh/m2/day
• Mini grid constructed with collaboration of ACCESS,
Malian government and KfW
• Solar hybrid systems :
- Solar PV field 33 kWc
- Back up generator 64 kW
- Batteries Storage 3640Ah/48V
- Grid length 10 Km in low voltage
Source:Access
8

9. 2.1. Access Energie
Project Financing & Management:
• Project Investment: 404.068,26 EUR
- 20% from ACCESS
- 80% of KfW/AMADER (Malian REA) as investment grant
• Tariff determined by regulator on basis of tools considering the interests of both the
operator and the community
• OPEX covered as each client pays monthly bill of 0,28 EUR/kWh
• ACCESS manages and operates the project
Project Outcome:
• Electricity for 393 households, small business, schools, health centre
and street lights
• Creation of new jobs and activities in the village
Next steps:
• The densification of the mini-grid, extension of solar capacity and
battery storage
• Improve the clients management system by introducing smart meters
• The Government of Mali, in collaboration with donors, is to replicate the model for 50 more
villages
Source:Access
9

10. 2.2. E.ON Off Grid Solutions
Komolo 7.5 kW-peak Solar-PV/Battery hybrid mini-grid in the Manyara region of Tanzania
The company:
• E.ON Off Grid Solutions (“EOGS”) develops, owns and operates off-grid energy systems in rural
areas in Africa based on renewable energy. Current focus is Tanzania, but it is foreseen to extend
operations into other (East / Sub-Saharan) African countries post 2016
• Customer segments are villages and businesses without access to the main electricity grid.
Technology focus are Solar Hybrid Systems (currently PV / Battery / Diesel)
The challenge:
• Komolo is a village of 1,500 people and is far away from
the electricity grid
• Currently only inefficient and cost-intensive solutions,
e.g. small diesel generators and kerosene lighting (so
high fuel costs), are used for lightning, phone charging
and electrical appliances
• Introducing solar PV with batteries to provide
independent remotely-controlled power systems
Source:E.ONOffGridSolutionsGmbH

11. 2.2. E.ON Off Grid Solutions
The Renewable Energy Solution:
• EOGS developed a containerized hybrid system
including a 7.5kWp Solar PV array ( ~30kWh/day)
- and a 50kWh battery storage
• The container is divided into two parts:
the back houses all electrical equipment and in
the front there is a kiosk (with a refrigerator,
battery charging station etc.)
• A mini-grid has been built up to connect individual customers and a pre-paid metering solution
based on mobile money is used for electricity sales
Project Financing & Management:
• The total project investment was approx. 100.000 USD (~50% for the power system, ~30% for
labor and ~20% for the mini-grid)
• The project was fully financed by EOGS. The energy service plattform business model includes
the pre-paid sale of electricity on a kWh basis as well as value added services (kiosk, phone
charging etc.)
Next steps:
• Currently 5 projects are implemented in the wider Arusha region and another 10 to 20 will
follow in 2016
11
Source:E.ONOffGridSolutionsGmbH

12. 2.3. FRES
Rural village hubs in Segou and Sikasso regions of Mali
The company:
• The Foundation Rural Energy Services (FRES) advances rural electrification in
developing countries. By setting up small-scale commercial electricity companies in
areas without a connection to the national electricity grid, FRES offers households
and small companies access to electricity preferably derived from solar energy.
Active in South Africa, Uganda, Mali, Burkina Faso and Guinea-Bissau
The challenge:
• High cost of electricity production (via individual generators) for SME’s, limiting
productivity and opportunities for business start-up and growth
• Limited grid infrastructure or electricity generation capacity / intermittent supply
• Sharp increasing in diesel fuel price
The Renewable Energy Solution:
• Finance and commissioning of 8 solar PV power plants (50-150kWp) at rural trading
hubs in Mali + Mini-grid infrastructure at 8 villages (new grid infrastructure and grid
extension at other sites with existing (diesel) mini-grids
12

13. 2.3. FRES
• Total installed capacity: 550kWp (combined total for 8 PV mini-grids)
• Actual production level: 1200MWh/year (combined total for 8 PV mini-grids)
• PV penetration ranges from 50 – 100% between the 8 mini-grids. System
configurations are largely PV/battery storage/ diesel genset
Project Financing & Management:
• Initial CAPEX financed by FRES, Nuon and AMADER (Malian Rural Electrification
Agency)/World Bank through grant financing
• Consumption based invoicing (€0.38/kWh) and pre-payment for customers
• Revenue finances ongoing operations and replacements
• Ongoing technical assistance and training for local technical staff from grid network
operator in the Netherlands
Outcome and next steps:
• 1160+ customers switched from diesel to PV hybrid mini-grids, i.e. households and
SME’s (e.g. tailors, bakeries, radio stations, banks, games room, pharmacies, ICT
services, water supply and commerce)
• Scale up of PV capacity to take place on 2016/2017 to support
growth in demand (approx. 10% annually) from new and existing
customers
13
ource:FRES

14. 2.4. Vergnet
Source:Photalia
Implementation of infrastructures of solar electric production for localities isolated in
Mauritania (Rural IPES)
The company:
• Photalia belongs to the Vergnet Group, an internationally recognized energy and water
supply specialist for remote or complex locations, providing customised solar energy
systems adapted to all the specific constraints of isolated sites
The challenge:
• Provide energy to very small towns with a fluctuating and unknown electric charge
• Avoid depending too much on a fossil solution and optimising the RE production
The Renewable Energy Solution:
• Installation of hybrid solution diesel solar
energy with storage batteries prioritizing
the solar energy
• 3 mini hybrid power plants for 3 towns incl.
the distribution network. Photalia designed the
system based on Innotec Studer technology

15. 2.4. Vergnet
Source:Photalia
Project Financing & Management:
• The total project investment amounts to 1.276.911 EUR for Photalia, in joint-venture
with local partner COGER
• This project was financed thanks to the EU through the FE-ACP-UE programme, under
the 10th FED (75 %) + Mauritanian Government (25 %) through ADER
• Power plants are managed by the ADER
• Photalia takes care of the local team management and training for the good running of
power plants
Project Outcome:
• About 8.000 inhabitants (through 555 individual connections and 25 industrial
connections) will benefit from this project
• Every power plant consists of a solar field of 25
kWc, a group of 100 kVA, 6 Studer inverters XTH
6000 and 6 Studer MPPT regulators V-T80

16. 2.5. RVE.SOL – Rural Energy & Water Solutions
KUDURA project, Sidonge Village, Busia Region, Western Kenya
The company:
• RVE.SOL is a triple bottom line social entrepreneurship using renewable technology
to eradicate poverty, create jobs and empower businesses in rural Africa
The challenge:
• Electrify the village with a RE mini-grid improving the local living standard and
providing new services to the community (e.g. mobile phones charging, hair cutting,
video hall)
• Turning the model based on the concept of financing microgrids through positive
cash flow, while maintaining a beneficial social and environmental impact
The Renewable Energy Solution:
• Installation of KUDURA technology, which is a sustainable integrated solution
encompassing potable water production and RE generation, distribution, monitoring,
mobile prepayment and smart metering, safe biogas and organic fertiliser
• Total installed capacity: 2,5kW - Actual production level: 50-70kWh / month (AC)
16

17. 2.5. RVE.SOL – Rural Energy & Water Solutions
Project Financing & Management:
• RVE.SOL invested 87.000 USD in this pilot project, break-even is expected after 12y
• A local community-based organization provided the on-the-ground know-how and
community management
• End-user pays 4 EUR flat rate for 250Wh Daily Allowance and monthly invoicing
• The fees for provision of water, biogas and electricity services fund the day-to-day
operation
Project Outcome & Next Steps:
• The KUDURA microgrid provides RE and potable water to 12 families in Sidonge
• Independent assessment confirmed positive social and environmental impact
• Transition from pilot to market validation and commercialisation scale-up. The
business model centers around defining sustainable financial models tailored to the
local environment in which they will function (ABC model + potable water production
to strengthen project cash flows)
17

18. 2.6. Neu-Ulm University of Applied Sciences
The company:
• HNU is an international connected business school. It prepares students orientated
towards future management tasks and runs different kinds of interdisciplinary
projects in several African countries
The challenge:
• Through its Applied Entrepreneurship Education Programme project, HNU focuses on
entrepreneurial education with the objective to create job opportunities in Ethiopia
The Renewable Energy Solution:
• Collaboration with Arba Minch University in Ethiopia and industry partners such as
Phaesun
• Micro entrepreneurs were trained to build and maintain prototypes for diverse kind
of businesses such as for productive use of energy
• Business Opportunities with Solar Systems (BOSS) models were developed and
constructed in Arba Minch, i.e. a solar-powered barber shop, cafeteria, charging
station, ice cream shop , mobile city photography shop, ICT training center for rural
areas and rural mobile photograph
18
Applied Entrepreneurship Education Programme, Arba Minch, Ethiopia

19. 2.6. Neu-Ulm University of Applied Sciences
Project Financing & Management:
• Project funding by the German Federal Ministry of Cooperation and Development
and are received from DAAD under the umbrella program “Industry partnerships
2013”
• The program has a financial revolving mechanism. Micro entrepreneurs get materials
for building the prototypes and are obligated to pay back all costs including a small
extra fee within 2 years to the Arba Minch University, so the university can refinance
the program with the repayments
Outcome & Next Steps:
• Creation of jobs with sustainable income for people who were previously jobless
• Rural businesses have also improved the quality of life of the villagers
• The long-term training program has enabled the Arba Minch University to deliver
outstanding community services
• Potentially single micro businesses will be scaled up in the form of a production
facility and a similar or adapted project version will be implemented in a further
University in Ethiopia and potentially South Africa
19

20. Lessons learnt and Messages

21. 21
• Commercial, scalable and replicable model
• Addresses affordability levels of the end user (pay-as-you-go, fee for
service…)
• Integrated capacity building (training and development)
• Manages risks and governance structure
• Financial sustainability within mid and long term
• Local management and maintenance
• High socio-economic impact at the local level
• Anchored within the communities
• Operational excellence
Sustainable Business Models – characteristics
Source: FRES

22. Messages to development community
• Engage with the national governments and provide TA to understand the needs
and help address them
• Increase available public-sector finance and leverage private capital to facilitate
small and medium-scale projects – focus on the CAPEX
• Stimulate capacity building, sharing experience and best practices
• Facilitate private sector investment by helping to reduce the (perceived) risks
on the regulatory, technological, political and market development level
• Tailor policies to achieve the highest impact on the ground and stimulate green
innovation and entrepreneurship
• Engage with stakeholders from the private sector and civil society who in the
end will implement the projects
22
 Advise and invest

23. Messages to national policy-makers
• High-level political commitment for RE-based rural electrification
• Clear, stable and swift regulatory framework for the (renewable) energy sector:
tariff methodology, permitting, standardised procedures and templates, …
• Incentives for RE project developers (e.g. REFiT, tax rebates, risk mitigation support)
and end-users (e.g. installation grant)
• Invest in RE projects (e.g. via national rural electrification fund) & capacity building
• Provide market information and determine which areas will not be covered by grid
extension
• Efficient and transparent bureaucracy to facilitate project implementation incl.
logistics and tackle corruption
23
 Create favourable market conditions

24. Messages to the private sector
• Why should you get engaged?
• Huge market and demand
• Huge renewable energy potential
• Huge relevance of independent solutions based on decentralised
renewable energy («off-grid»)
• Just makes sense from a business and CSR point of view
• How can you get engaged? Get in touch with ARE!
• Find partners to implement your project
• Linking financiers with project developers
• Realise your CSR objectives and showcase your green efforts
• Help us advocate decentralised RE generation in developing countries 24
 Get involved, the time is now

25. Alliance for Rural Electrification
Rue d’Arlon 69-71
1040 Brussels, Belgium
are@ruralelec.org
www.ruralelec.org
Source:ARE
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